19 July 2011 early edition/transcript/Part 4
Part 4 THERESE COFFEY: Mr Murdoch. Who made the recommendation to close down the News of the World to the board of News Corporation? RUPERT: It was a result of a discussion between my son and I and senior executives and Ms Brooks one morning called the whole board to seek agreement. COFFEY: You've already suggested that it was because you felt ashamed - it's not a suggestion that it was a commercial decision to close the News of the World? RUPERT: Far from it. COFFEY: Mr James Murdoch, you suggested earlier that the payments to Mr Taylor were not notified at News Corp level because of the finance threshold. Could you tell us a bit more about that? I understand that you had to agree for the payment to Mr Taylor. Could you tell us a bit more, is that financial level, a managerial decision? JAMES: I'm very happy to discuss and thank you, it's a good question. I'm very happy to discuss the matter of Mr Taylor. The out-of-court settlement with Mr Taylor was related to a voicemail interception that had occurred previously and was actually one of the counts as I understand it of the 2007 trial of Mr Mulcaire. It's important to think back to 2008 to understand what we knew then, what I knew then and what the information was in the context.The underlying interception was not a disputed fact. Secondly, it was the advice and further to that I should say, it was the advice and the clear view of the company that, if litigated, that the company would lose that case that it was almost certain to lose that case because the underlying fact was not in dispute. Thirdly the company sought distinguished outside counsel to understand if the case were litigated and if it were to be lost, which was the great likelihood, what the financial quantum would be or what that would cost the company. It was advised that with expenses, legal expenses and damages that could be between £500,000 and a million pounds or thereabouts. I don't recall the exact number of the advice, I think it was £250,000 plus expenses, plus litigation costs, something like that. And lastly, this was in a context in the first half of 2008 and this was my first real involvement with any of these issues where there was no reason at the time to believe that the issue of these voicemail interceptions was anything but a settled matter and that it was in the past after the successful prosecution of the two individuals we discussed as well as the resignation of the editor. The out-of-court settlement was made in that context and it was within the authorities, as I understood it, of News International to be able to make those out-of-court settlements in due course without going to the global level company. I at the time was the regional head for Europe and Asia for News Corporation and I directed that it was all right to settle that but did not get involved in any of the negotiations directly about that settlement but I do recall in 2008 that those were the things that were known. RUPERT: My son had only been with the company for a matter of a very few weeks JAMES: For clarity, it was a few months, I'd come back to the company at the end of 2007 in the middle of December and this was some time, I don't recall the exact date, but some time in the first half of 2008. COFFEY: Given you were new to the company, weeks, months, I don't want to have a father-son argument about that. What level of financial payments could other News International executives sanction, people like Colin Myler or Tom Crone or Rebekah Broooks without recourse to you as the chairman? JAMES: Generally speaking, the way the company will operate, as any company will operate, is within certain financial parameters from a financial planning perspective, we will look at a budget for a year much like a house will manage its budget and say how much money do we have to spend and how much money does a particular company or part of the company or department have to spend and as long as they stay within those guidelines the belief is that they should be empowered to make those judgements, to spend those monies and achieve the ends that they can. I don't have at the top of my fingers the precise financial authorities in that but I can discuss after the committee hearing with you what exactly you'd like to know and we can discuss whether or not it's right to come back to you with that. COFFEY: What level of financial payout would it have taken to require an authorisation from the board of News Corp? JAMES: For the full board it's in the many, some millions but I don't know the exact answer to that COFFEY: Do you know how much has been paid out to people, authorised by your executives? JAMES: Paid out in what way? COFFEY: Paid out as settlements JAMES: Legal settlements? I do not know the total number. Around the world it's customary to reach out-of-court settlements in civil litigations and civil matters. Rather than go through the lengthy and sometimes expensive litigation process with the risk that that often entails it's customary to try to reach out-of-court settlements in many cases. RUPERT: I should just add that we have a very strong board of committee at News Corporation which would know about this. Neither of us are members of that, they are outside directors and they review all these things. Q246 Dr Coffey: Thank you. Building on that then, how is it possible to make payments to people if they do not invoice you or if they are not an employee of New Corps's subsidiaries? JAMES: I am sorry, Dr Coffey? Dr Coffey: How is it possible to transfer cash or some other form of remuneration to people who do not invoice you or who are not employees of News Corps's subsidiaries? JAMES: I do not know the exact arrangements of that. I don't do that myself to tell you how that is done, but sometimes, in certain instances, it is appropriate for journalists or managers in a certain environment to have the ability to use cash in some instances. It is customary, however, for them to record those, and all of the cash expenses, as well as invoice expenses, should be looked at and recorded. Q247 Dr Coffey: So things like use of petty cash—that could be quite big sums of money or small—at the moment you just record that the journalist gave it to somebody. JAMES: Yes, and I don't have direct knowledge of all of those arrangements. Q248 Dr Coffey: I was going to ask if payments could have been made to family members of those alleged to have been hacked and similar, but is it possible that other forms of remuneration can be used in your company apart from cash and bank transfers? I am talking of things like travellers cheques, vouchers and things that can be redeemed for cash. JAMES: I don't have knowledge of that. Q249 Dr Coffey: Just looking at some of your corporate governance—page 2 and page 4 of your own code—it mentions directors, employees and officers of News Corporation acting to the principles set forth, including consultants, agents, suppliers and business partners adhering to the standards. It says, "We may never ask a third party to perform any act that would violate these Standards." Can you tell me a little bit more, especially on the financial side, how you, as an organisation, try and make that happen? RUPERT: How that would work is that each newspaper has an editorial manager—the titles vary. They have to approve the expenses claims of every reporter. A reporter has no authority to pay money on his own. JAMES: Just to clarify, the managing editor's office often manages a lot of the expenses and budgets, and is directed to do so with propriety. Q250 Dr Coffey: Do you require your executives to make annual statements that they have abided by your codes of conduct and ethics? I used to work for a family-owned company. JAMES: Every employee, every colleague around the world of News Corporation receives the code of conduct. It is a pamphlet that has some detail in it—not too much, so that people read it. With respect to what ethical conduct is required— RUPERT: We would be happy to make it available to you. JAMES: We would be very happy to make it available to you. It is about ethical conduct, the law, breaking the rules and so on. Everyone who becomes an employee is required to do that. Our legal counsel also internally conducts workshops around the world with staff, from Mumbai to Manchester, around those rules and code of conduct. That is something we try hard to communicate as crisply as we can to everyone in the business. COFFEY: I appreciate Mr Murdoch's statement at the beginning. Given that you have been in the media spotlight and perhaps, I expect, not appreciated the attention you have had, without wishing to suppress investigative journalism, will this make you think again about how you approach your headlines and targets in future? That could be people from Hillsborough 96 to celebrities to others. Will you think again about what your headlines will say in future? RUPERT: I think all our editors certainly will. I am not aware of any transgressions. It is a matter of taste. It is a very difficult issue. We have in this country a wonderful variety of voices and they are naturally very competitive. I am sure there are headlines that occasionally give offence, but it is not intentional. JAMES: It is important to say that one of the lessons, if you will, from all of this for us is, we do need to think as a business as well as an industry in this country more forcefully and thoughtfully about our journalistic ethics, about what exactly the codes of conduct should be, not just for News International, our UK publishing subsidiary, but the industry as a whole, and what sort of governance should be around the whole area. We welcomed last week the Prime Minister's announcement of a judicial inquiry into both journalistic ethics and relationships with police and politicians. That is a really good thing for the country and for all of the interested parties to engage with fully. One specific action we have taken to try to be as proactive as we can around this, is to set up what we call the management and standards committee, that is outside the management of our publishing company and reports through the independent directors of our global public board, precisely to look at, first, the specific issues of how we co-operate with the investigations and deal with allegations of wrongdoing and get to the bottom of it. It is also importantly about how we co-ordinate, co-operate and proactively engage with those judicial inquiries, and how we start to set a code of conduct and a code of ethics that we and it think can be both a paragon for all of our newspapers and all of the industry, but also something that has teeth and can hold the company to account. That management and standards committee is independently chaired, and we think it is going to be a much better way to go in future. We would like over the next six months and years, to be judged on the actions the company takes to put that right and put that in place. COFFEY: Thank you. RUPERT: I would just like to say, if I may, that it doesn't take away at all from what we have been saying about our apologies or our blame for anything, but this country does greatly benefit from having a competitive press and therefore having a very transparent society. That is sometimes very inconvenient to people. But I think we are better and stronger for it.